Pharmaceutical IP and competition law in South Korea: overview

A Q&A guide to pharmaceutical IP and competition law in South Korea.

The Q&A gives a high level overview of key issues including patents, trade marks, competition law, patent licensing, generic entry, abuse of dominance and parallel imports.

For information on pharmaceutical pricing and state funding, manufacturing, marketing, clinical trials, advertising, labelling, and product recall and liability, visit Medicinal product regulation and product liability in South Korea: overview.

The Q&A is part of the global guide to Life Sciences Law. For a full list of jurisdictional Q&As visit www.practicallaw.com/lifesciences-guide.

Contents

Patents

1. What are the legal conditions to obtain a patent and which legislation applies? Which products, substances and processes can be protected by patents and what types cannot be patent protected?

Conditions and legislation

The following must be satisfied for patentability (Patent Act):

  • Novelty.

  • Inventiveness.

The Patent Act does not explicitly require inventions to be capable of industrial application. However, a patent application must contain a plausible method of implementing the invention. In that sense, the capable of industrial application requirement is indirectly contained in the Patent Act.

The requirements for patentability must be satisfied as at the filing date.

Scope of protection

Patents can be issued for medical devices, medicine, and methods for producing these products. However, patents cannot be issued for the method of diagnosing, treating or operating on a human being.

Patents cannot be issued if there is either:

  • A prior filing based on the claims.

  • A prior filing based on the specifications.

Therefore, the following are not patentable:

  • Academic and experimental inventions.

  • Inventions that clearly cannot be implemented in reality.

  • Inventions without safety or danger prevention measures.

Patent-Approval Linkage System

Mirroring the US Hatch-Waxman Act, the Patent-Approval Linkage System was implemented as of 15 March 2015. It connects the marketing authorisation process of pharmaceutical products with the patent enforcement process.

 
2. How is a patent obtained?

Application and guidance

Patent applications are handled by the Korean Intellectual Property Office (KIPO). The KIPO website provides guidance on the application procedure (www.kipo.go.kr).

Application fees and examination fees must be paid and, if registration is accepted, a registration fee must be paid.

As at 1 January 2013, the application fee consists of both:

  • A basic fee of KRW38,000 for electronic applications and KRW58,000 for paper applications.

  • KRW1,000 per page for a paper application that goes beyond 20 pages, including specification, drawings, and summary.

The examination fee consists of both:

  • A basic fee of KRW130,000.

  • An additional fee of KRW40,000 per claim.

The registration fee consists of:

  • A basic fee of KRW15,000 per year.

  • An additional fee of KRW13,000 per claim.

  • If the patent is for 13 to 25 years, a basic fee of KRW360,000, with an additional fee of KRW55,000 per claim.

More detailed information is available on the KIPO's website.

Process and timing

The following process and timing typically applies:

  • If the application is accepted by the KIPO, it is processed and the filing date is fixed. Priority is established from the filing date.

  • An application is generally accepted and an application number assigned to it. However, if the application is defective and a correction of the defect is not possible, the application is rejected. If the defect can be corrected, the KIPO can issue an office action, requesting the applicant to correct the defect.

  • An application is generally published after one and a half years from filing.

  • After that, the applicant must file a request for examination of his application within five years from filing the application (a request for examination can also be filed before publication of the application). If the request for examination is not filed within this five-year period, the application is deemed withdrawn.

  • Registration of a patent can take from one and a half years to two years from filing or even longer, depending on a number of factors such as the nature of the invention.

 
3. How long does patent protection typically last? Can monopoly rights be extended by other means?

Duration and renewal

The term of a patent right starts once the patent is issued and ends at the expiry of 20 years from filing of the application. In the case of divisional patents and amended patents, the patent right expires after 20 years from the date of the original application.

A patent term cannot usually be extended.

Extending protection

For medical patents, the term of the patent can be extended for the length of time (up to five years) required for the relevant product to be approved by other relevant authorities under applicable laws (for example, the Pharmaceutical Affairs Act). This ensures that the applicant can use his patented invention for the duration he otherwise would have enjoyed, but for the period required for approvals from the other authorities.

To extend a medical patent:

  • An application for extention of the patent term must be submitted to the Commissioner of the KIPO.

  • The application must be made after three months of the date of approval under the PAA, and cannot be made within six months of the date of expiration of the existing 20-year term of the patent.

 
4. How can a patent be revoked?

The validity of a patent can be challenged in proceedings before the KIPO by an interested party or the KIPO patent examiner. A patent can be subject to invalidation (as if the patent never existed) if the:

  • Invention lacks novelty or inventiveness.

  • Patent application was filed after the filing of an identical invention.

  • Patent does not specify the purpose, structure or effect of the invention, so that a person of ordinary skill in the art cannot easily perform the invention.

  • Scope of the patent claims is not clear and concise, or the claims are not supported by the written specifications.

  • Patent application fails to identify joint ownership when the right to patent is jointly owned.

 
5. How is a patent infringed? How is a claim for patent infringement made and what remedies are available?

Conditions for infringement

A patent is infringed when a third party performs the patented invention as a business without authorisation.

Claim and remedies

When patent infringement occurs, the patent right holder can:

  • In a civil proceeding, file an action for a restraining order or a preliminary injunction, and/or file an action for a permanent injunction and damages.

  • In a criminal procedure, file a report with the investigating authorities for criminal prosecution, and the infringer can be imprisoned or fined if found guilty.

 
6. Are there non-patent barriers to competition to protect medicinal products?

A six-year marketing exclusivity period is recognised for new drugs (Pharmaceutical Affairs Act).

 

Trade marks

7. What are the legal conditions to obtain a trade mark and which legislation applies? What cannot be registered as a trade mark and can a medicinal brand be registered as a trade mark?

Conditions and legislation

The most basic requirement for registering a trade mark is that it cannot be identical or similar to previously registered trade marks on identical or similar specific products. In addition, the mark must be capable of distinguishing goods from the goods of others.

The Trade mark Act regulates trade mark registrations.

Scope of protection

A medicinal product brand can be registered as a trade mark when the requirements under the Trade mark Act are met. In registering a medicinal product brand as a trade mark, terms describing quality, ingredient, effect, or general terms are not registrable.

 
8. How is a trade mark registered?

Application and guidance

Trade mark applications are handled by the KIPO. The KIPO website provides guidance on the application procedure.

The official filing fee is KRW56,000 for electronic applications, and KRW66,000 for paper applications. An additional KRW2,000 is imposed for each additional designated good, in excess of 20 designated goods in a class.

The registration fee is KRW211,000. An additional KRW2,000 is imposed for each additional designated good, in excess of 20 designated goods in a class.

Process and timing

An applicant must file a trade mark application with the KIPO:

  • If the applicant is preparing for use or is using the trade mark, priority examination is permitted. If priority examination is requested, the examination can be concluded within two to three months.

  • If there are no grounds for rejection, the application is published.

  • If there are grounds for rejection, the KIPO issues an office action requesting the applicant to correct the grounds for rejection. If it overcomes the grounds for rejection, the application is published.

  • An opposition can be filed within two months from the date of publication of the application. If no opposition is filed during that period, the trade mark is registered.

  • If an opposition is filed, the KIPO reviews the opposition. The opponent can provide the grounds for opposition through a third party observation process, and the applicant is given an opportunity to rebut the opposition. The opposition process takes about four months. The KIPO's decision cannot be appealed.

  • If no opposition is filed after publication or the opposition is dismissed, the KIPO issues a registration decision and the applicant must pay the registration fee within two months from that date. The trade mark becomes registered immediately on payment.

It takes about eight to ten months from the date of filing an application for KIPO to decide whether to allow registration of the trade mark. However, it can take four more months if an opposition is filed.

 
9. How long does trade mark protection typically last?

Trade mark protection lasts for ten years.

For renewal, the applicant must file an application for renewal with KIPO within one year before expiration of the protection period, and pay trade mark registration fees. However, for a fixed penalty, the applicant can file an application for renewal with KIPO within six months following expiration of the protection period.

 
10. How can a trade mark be revoked?

A registered trade mark can be invalidated (as if the trade mark was never registered) if there are grounds for invalidation, for example failure to satisfy the conditions for registration because the trade mark is either:

  • Identical or similar to a prior registered trade mark.

  • Composed of only general, descriptive or geographic terms.

A registered trade mark can be cancelled (the trade mark right no longer exists from the date of cancellation) if the trade mark either:

  • Was used improperly by the trade mark owner or trade mark licensee (causing misconception or confusion).

  • The trade mark has not been used for more than three years without just cause.

 
11. How is a trade mark infringed? How is a claim for trade mark infringement made and what remedies are available?

Conditions

Trade mark infringement occurs when there is use of a trade mark that is identical or similar to the registered trade mark, in a product that is identical or similar to specific products of the registered trade mark without authorisation of the trade mark right holder.

Claim and remedies

When a trade mark is infringed, the trade mark right holder can file a claim for:

  • Injunction.

  • Destruction of infringing products, equipment used in producing the infringing products, and other measures necessary to prevent infringement.

  • Damages.

In criminal proceedings, the trade mark right holder can file a criminal report with the investigating authorities for trade mark infringement, and the infringer can be imprisoned or fined if found guilty.

 
12. Outline the regulatory powers and enforcement action against counterfeiting in the pharmaceutical sector.

The sale, or the storage or display for the purpose of selling, of counterfeit medicinal products is prohibited (Pharmaceutical Affairs Act). The MFDS has the regulatory powers relating to counterfeit medicinal products.

If a seller of a medicinal products sells or stores or displays for the purpose of selling counterfeit products, and becomes aware of a problem with the safety or efficacy of a counterfeit product, he must, without delay, recall or take necessary measures to recall the product from circulation, and report the recall plan to the Commissioner of the MFDS. The Commissioner of the MFDS can then order disposal of the counterfeit medicinal product, according to the Pharmaceutical Affairs Act.

Violation of the above can be subject to:

  • Cancellation of approval, a permit or registration.

  • Suspension of manufacturing or import, or up to a one year suspension of business.

  • Criminal sanctions, such as imprisonment or a fine.

The person liable and also the company for which the person works can be fined.

For information on pharmaceutical pricing and state funding, manufacturing, marketing, clinical trials, advertising, labelling, and product recall and liability, visit Medicinal product regulation and product liability in South Korea: overview ( www.practicallaw.com/1-502-7211) .

 

IP and competition law issues

13. Briefly outline the competition law framework in your jurisdiction and how it impacts on the pharmaceutical sector. In particular, the competition authorities and their regulatory powers, key legislation, whether pharmaceutical investigations are common, key recent activity and case law.

Prohibition of unfair collusive activities

Under the Monopoly Regulation and Fair Trade Act (MRFTA), the Korea Fair Trade Commission (KFTC) (http://eng.ftc.go.kr) prohibits and can impose a cease-and-desist order and/or administrative fines against cartel activities.

Cartel activities are defined as an agreement, through agreement/arrangement/resolution with other enterprises, relating to fixing/maintaining or changing prices, determining the terms of trade or conditions of payment of goods or services or restricting production, delivery, transportation or transaction of goods or transaction of services, whereby the agreement unfairly restricts competition.

Criminal sanctions such as imprisonment or a fine can be imposed. The person liable and also the company for which the person works can be fined.

Prohibition of unfair inducement of customers

The MRFTA also prohibits offering and receipt of kickbacks (that is, benefits offered to healthcare professionals to induce recommendation or prescription to their clients). In case of violations of the MRFTA, the KFTC can issue a corrective order, impose monetary fines and file a criminal report with the public prosecutors' office.

Upon violation, the KFTC can impose a cease-and-desist order and/or administrative fines. Criminal sanctions, such as imprisonment or a fine, can be imposed. The person liable and also the company for which the person works can be fined.

Prohibition of retail price maintenance

The MRFTA also prohibits the coercion of another undertaking in the distribution channel to sell goods or services at a certain price subject to binding conditions. This applies to the sale of medicinal products. The KFTC can impose a cease-and-desist order, administrative fines and/or criminal sanctions, such as imprisonment or a fine. The person liable and also the company for which the person works can be fined.

 
14. Briefly outline the competition issues that can arise on the licensing of technology and patents in a pharmaceutical context.

In its Guideline for the Unfair Use of Intellectual Property Rights, the KFTC prohibits various abusive exercises of intellectual property rights.

 
15. Are there competition issues associated with the generic entry of pharmaceuticals in your jurisdiction?

Under the South Korea-US Free Trade Agreement 2012, South Korea has introduced the Patent Approval Linkage System, which is similar to the US Hatch-Waxman Act.

Additionally, the KFTC holds the view that "pay-for-delays" are illegal, and a case on this point is currently pending at the Supreme Court.

 
16. Have abuse of dominance issues arisen in the pharmaceutical sector in your jurisdiction?

The KFTC recently found an unfair refusal to deal, and imposed a cease-and-desist order. This was in relation to an enterprise that manufactures and sells medicinal products for which it is the exclusive supplier in South Korea. The enterprise unfairly refused to trade with a particular wholesaler.

 
17. Have parallel imports of pharmaceuticals raised IP and competition law issues in your jurisdiction?

South Korean law does not specifically prohibit parallel imports. However, the parallel import of medicinal products is not allowed, in that a product licence must be obtained to sell foreign medicinal products in South Korea.

 
18. Does a patent or trade mark licence and payment of royalties under it to a foreign licensor have to be approved or accepted by a government or regulatory body? How is such a licence made enforceable?

There is no such requirement in South Korea.

For information on pharmaceutical pricing and state funding, manufacturing, marketing, clinical trials, advertising, labelling, and product recall and liability, visit Medicinal product regulation and product liability in South Korea: overview ( www.practicallaw.com/1-502-7211) .

 

Contributor profiles

Hyeong Gun Lee

Partner, Lee & Ko

T +82 2 772 4379
F +82 2 772 4001
E hyeonggun.lee@leeko.com
W www.leeko.com

Professional qualifications. South Korea, 1994

Areas of practice. Healthcare law; M&A; general corporate law.

Non-professional qualifications. LLB, Seoul National University College of Law; LLM, Columbia Law School.

Recent transactions

  • Representing GE Healthcare, Bard and other multinational medical devices clients in matters relating to the import licence of medical devices, business contracts and other issues.
  • Representing LG Healthcare in acquiring Haitai Beverage Company.
  • Advising Bayer Korea and other multinational pharmaceutical clients on potential patent infringement, compliance and other various legal and regulatory issues.
  • Advising Mars and other food industry clients on various legal and regulatory issues.

Languages. Korean, English

Professional associations/memberships. Korean Bar Association.

Publications

  • Appraisal Rights of Dissenting Shareholders, BFL (vol. 38), Center for Financial Law at Seoul National University, 2009.

  • Korean Regulations on Business Combination involving Foreign Entities, Asialaw Corporate Finance Review, January 2008.

Jin Hwan Chung

Partner, Lee & Ko

T +82 2 772 4711
F +82 2 772 4001
E jinhwan.chung@leeko.com
W www.leeko.com

Professional qualifications. South Korea, 2000; New York State, US, 2009

Areas of practice. Healthcare law; antitrust; general corporate law.

Non-professional qualifications. LLB, Seoul National University College of Law; LLM, Georgetown University Law Center

Recent transactions

  • Advising AstraZeneca, Bayer, Berna Biotec (Crucell), Daiichi-Sankyo, GE Healthcare, Janssen, Johnson & Johnson Medical, Merck & Co., Inc., Novo Nordisk and UCB on matters regarding compliance (including FCPA), regulation and business contracts.
  • Representing multinational and domestic healthcare companies and medical institutions in connection with the investigation by the Korea Fair Trade Commission.
  • Representing Johnson & Johnson Korea in acquiring the household healthcare business from Pfizer Korea.

Languages. Korean, English

Professional associations/memberships. Korean Bar Association; New York State Bar; American Bar Association.

Publications. The International Comparative Legal Guide to: Pharmaceutical Advertising – Korea Part, Global Legal Group, 2009.


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